What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-10 · 148 added, 249 removed, 370 unchanged (52% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

Current assets:

1 unchanged sentence

Marketable securities

Accounts receivable

Unbilled accounts receivable

13 unchanged sentences

Deferred revenue, excluding current portion

Other liabilities, excluding current portion

Total liabilities

6 unchanged sentences

200,000,000 shares authorized;

27,459,196 and 23,335,514 shares issued as of September 30, 2020 and December 31, 2019, respectively;

27,277,983 and 22,654,444 shares outstanding as of September 30, 2020 and December 31, 2019, respectively

32,677,454 and 28,067,402 shares issued as of March 31, 2021 and December 31, 2020, respectively;

32,594,436 and 27,941,566 shares outstanding as of March 31, 2021 and December 31, 2020, respectively

Treasury stock, at cost;

no shares as of September 30, 2020 and December 31, 2019

no shares as of March 31, 2021 and December 31, 2020

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive loss

Accumulated deficit

6 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration revenue

5 unchanged sentences

Other income, net

Cumulative convertible preferred stock dividends

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders, basic and diluted

Weighted average number of common shares used in net loss per share attributable to common stockholders, basic and diluted

Net loss per share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

Comprehensive loss:

Other comprehensive (loss) income:

Unrealized (loss) gain on marketable securities

Total other comprehensive (loss) income

Other comprehensive loss:

Unrealized loss on marketable securities

Total other comprehensive loss

Comprehensive loss

1 unchanged sentence

Fulcrum Therapeutics, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

Series A Convertible

Preferred Stock

Series B Convertible

Preferred Stock

Treasury Stock

comprehensive

Stockholders’ Equity

income (loss)

Stockholders’

Balance at December 31, 2019

Issuance of Series B convertible preferred stock in connection with asset acquisition, net of issuance costs

Issuance of common stock

Issuance of common stock under employee benefit plans

Vesting of restricted stock awards

Repurchase of unvested restricted stock awards

1 unchanged sentence

Stock-based compensation expense

Unrealized loss on marketable securities

Balance at March 31, 2020

Issuance of common stock

Repurchase of unvested restricted stock awards

Retirement of treasury shares

Stock-based compensation expense

Balance at June 30, 2019

Issuance of common stock

Conversion of convertible preferred stock into common stock

Initial public offering, net of underwriting discounts, commissions and offering costs

Repurchase of unvested restricted stock awards

Retirement of treasury shares

Stock-based compensation expense

Balance at September 30, 2019

Balance at December 31, 2020

Issuance of common stock

Issuance of common stock in connection with follow-on offering, net of issuance costs

Issuance of common stock under employee benefit plans

Vesting of restricted stock awards

Repurchase of unvested restricted stock awards

3 unchanged sentences

Balance at March 31, 2021

Issuance of common stock

Issuance of common stock in connection with private placement, net of placement agent fees and offering costs

Repurchase of unvested restricted stock awards

Retirement of treasury shares

Stock-based compensation expense

Unrealized gain on marketable securities

Balance at June 30, 2020

Issuance of common stock

Repurchase of unvested restricted stock awards

Retirement of treasury shares

Stock-based compensation expense

Unrealized loss on marketable securities

Balance at September 30, 2020

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

2 unchanged sentences

Stock-based compensation expense

In-process research and development expenses

Net amortization of premiums and discounts on marketable securities

Changes in operating assets and liabilities:

Accounts receivable

Unbilled accounts receivable

9 unchanged sentences

Purchases of property and equipment

Transaction costs associated with asset acquisition

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing activities

Payment of Series B convertible preferred stock issuance costs

Proceeds from initial public offering of common stock, net of underwriting discounts and commissions

Proceeds from issuance of common stock in connection with private placement, net of placement agent fees and offering costs

Proceeds from issuance of common stock in connection with follow-on offering, net of issuance costs

Principal payments on capital lease obligations

1 unchanged sentence

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

3 unchanged sentences

Non-cash investing and financing activities:

Acquisition of in process research and development through issuance of stock

Conversion of convertible preferred stock into common stock

Property and equipment purchases unpaid at end of period

1 unchanged sentence

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:

September 30,

Cash and cash equivalents

15 unchanged sentences

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2020 and the results of its operations and its cash flows for the three and nine months ended September 30, 2020 and 2019.

The results for the three and nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period.

The accompanying consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2021 and the results of its operations and its cash flows for the three months ended March 31, 2021 and 2020.

The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2021 (the “Annual Report on Form 10-K”).

2 unchanged sentences

Upon the closing of the IPO, all 112,500,000 shares of outstanding preferred stock automatically converted into 16,071,418 shares of common stock.

On July 5, 2019, in connection with the IPO, the Company effected a one-for-seven reverse stock split of the Company’s issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each of the Company’s outstanding series of preferred stock.

All share and per share amounts in the accompanying consolidated financial statements and notes thereto for periods prior to the reverse stock split have been retroactively adjusted to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.

On June 9, 2020, the Company issued and sold 4,029,411 shares of common stock to investors in a private placement at a price of $17.00 per share, resulting in gross proceeds of $68.5 million, before deducting offering costs of approximately $4.2 million.

The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from a private placement of the Company’s common stock, proceeds from the IPO, issuances of convertible notes and convertible preferred stock, an upfront payment received from its collaboration and license agreement (the “Acceleron Collaboration Agreement”) with Acceleron Pharma Inc.

(“Acceleron”), and an upfront payment received from its collaboration and license agreement (the “MyoKardia Collaboration Agreement”) with MyoKardia, Inc.

(“MyoKardia”).

As of September 30, 2020, the Company had an accumulated deficit of $203.9 million.

On June 9, 2020, the Company issued and sold 4,029,411 shares of common stock to investors in a private placement at a price of $17.00 per share, resulting in net proceeds of $64.3 million after deducting offering costs.

On August 11, 2020, the Company entered into an Equity Distribution Agreement with Piper Sandler & Co.

(“Piper Sandler”), as sales agent, pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $75.0 million under an “at-the-market” offering program (the “ATM Offering”).

The Equity Distribution Agreement provides that Piper Sandler will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the ATM Offering.

From the initiation of the ATM Offering through March 31, 2021 , the Company has issued and sold 550,000 shares under the ATM Offering, resulting in aggregate net proceeds of $5.7 million after deducting issuance costs of $0.2 million.

On January 22, 2021, the Company completed a public offering of its common stock and issued and sold 4,600,000 shares of common stock at a public offering price of $11.00 per share, resulting in net proceeds of $47.4 million after deducting underwriting discounts and commissions and offering expenses.

The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the sale of shares of common stock in public offerings, a private placement, and the ATM Offering, through issuances of convertible preferred stock, and from upfront payments received from the collaboration and license agreements with Acceleron Pharma Inc.

(“Acceleron”), and MyoKardia, Inc.

(“MyoKardia”), a wholly owned subsidiary of Bristol Myers Squibb Company.

As of March 31, 2021, the Company had an accumulated deficit of $238.6 million.

The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to expand its research and development efforts.

The Company expects to finance its future cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

As of the date of issuance of these financial statements, the Company expects that its cash , cash equivalents , and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements.

However, the Company has based this estim ate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it.

The Company expects that its cash, cash equivalents, and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements.

However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it.

As a result, the Company could deplete its capital resources sooner than it currently expects.

6 unchanged sentences

The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K .

There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2020, except as noted below with respect to the Company’s accounting policies related to marketable securities and except as noted below under “Recently Adopted Accounting Pronouncements”.

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2021.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of expenses during the reported periods.

Estimates inherent in the preparation of these consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, stock-based compensation expense, the fair value of the Company’s common stock and convertible preferred stock prior to the completion of the IPO, and income taxes.

The Company bases its estimates on historical experience and other market specific or other relevant assumptions it believes to be reasonable under the circumstances.

1 unchanged sentence

Actual results could differ from those estimates or assumptions.

Fair Value of Financial Instruments

The fair value of the Company’s financial assets and liabilities reflects the Company’s estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date.

In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities).

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Quoted prices in active markets for identical assets or liabilities.

An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Observable inputs other than Level 1 inputs.

Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s cash equivalents and marketable securities are carried at fair value and are classified according to the fair value hierarchy described above (Note 3).

The cash equivalents and marketable securities are initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services.

The pricing services utilize industry standard valuation models, including both income and market based approaches, to determine fair value.

Marketable Securities

The Company classifies marketable securities with a remaining maturity when purchased of greater than three months as marketable securities.

As of September 30, 2020, the Company’s marketable securities consisted of investments in U.S.

Treasury securities, corporate bonds, and commercial paper.

Marketable securities are classified as current assets on the consolidated balance sheets if the marketable securities are available to be converted into cash to fund current operations.

Marketable securities are carried at fair value with the unrealized gains and losses included in accumulated other comprehensive loss, which is a component of stockholders’ equity, until such gains and losses are realized.

Any premium arising at purchase is amortized to interest expense over the period of the earliest call date, and any discount arising at purchase is accreted to interest income over the life of the instrument.

Realized gains and losses are determined using the specific identification method and are included in other income, net.

If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other-than-temporary” and, if so, marks the investment to market through a charge to the Company’s statement of operations and comprehensive loss.

Off-Balance Sheet Risk and Concentrations of Credit Risk

5 unchanged sentences

Treasury securities.

The Company’s marketable securities primarily consist of U.S.

Treasury securities, corporate bonds, and commercial paper, and potentially subject the Company to concentrations of credit risk.

The Company’s marketable securities primarily consist of corporate bonds and commercial paper, and potentially subject the Company to concentrations of credit risk.

The Company has adopted an investment policy that limits the amounts the Company may invest in any one type of investment.

The Company has not experienced any credit losses and does not believe it is exposed to any significant credit risk on these funds.

Recently Adopted Accounting Pronouncements

In March 2017, the FASB issued ASU No.

2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20):

Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”).

This standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period to the earliest call date.

The new standard became effective for the Company on January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or footnote disclosures.

In July 2017, the FASB issued ASU No.

2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I.

Accounting for Certain Financial Instruments with Down Round Features II.

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”).

Part I of the standard applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down-round features.

Part II of the standard replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within ASC 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments.

The new standard became effective for the Company on January 1, 2020 under the extended transition period.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or footnote disclosures.

In November 2018, the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 .

The standard clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account.

The standard amends ASC 808 to refer to the unit-of-account guidance in ASC 606 and requires it to be used only when assessing whether a transaction is in the scope of ASC 606 when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606.

The standard requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting that transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer.

The new standard became effective for the Company on January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or footnote disclosures.

Recent Accounting Pronouncements—To Be Adopted

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In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements (“ASU 2018-11”), which permits entities to continue applying legacy guidance in ASC 840, Leases , including its disclosure requirements, in the comparative periods presented in the year that the entity adopts the new leasing standard.

In November 2019, the FASB deferred the effective date of ASU 2018-11 for private companies to fiscal years beginning after December 15, 2020.

In June 2020, the FASB further deferred the effective date of ASU 2018-11 for private companies to fiscal years beginning after December 15, 2021.

Targeted Improvements , which permits entities to continue applying legacy guidance in ASC 840, Leases , including its disclosure requirements, in the comparative periods presented in the year that the entity adopts the new leasing standard.

In November 2019, the FASB deferred the effective date of ASU 2016-02, as amended, for private companies to fiscal years beginning after December 15, 2020.

In June 2020, the FASB further deferred the effective date of ASU 2016-02, as amended, for private companies to fiscal years beginning after December 15, 2021.

The new standard will become effective for the Company on January 1, 2022.

The Company will apply the transition method permitted by ASU 2018-11.

The Company will apply the transition method permitted by ASU 2016-02, as amended.

The Company is currently evaluating the effect that adoption of the standard is expected to have on the Company’s consolidated financial statements and related disclosures.

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2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

Measurement of Credit Losses on Financial Instruments .

The standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks.

3 unchanged sentences

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes-Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

2019-12, Income Taxes-Simplifying the Accounting for Income Taxes .

The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences.

3 unchanged sentences

Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the fair value hierarchy classification of such fair values as of September 30, 2020 and December 31, 2019 (in thousands):

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the fair value hierarchy classification of such fair values as of March 31, 2021 and December 31, 2020 (in thousands):

Fair Value Measurements at

September 30, 2020

March 31, 2021

Cash equivalents:

1 unchanged sentence

Marketable securities:

Treasury securities

Corporate bonds

4 unchanged sentences

Money market funds

There were no transfers between fair value levels during the three and nine months ended September 30, 2020.

Marketable securities:

Marketable securities consisted of the following as of September 30, 2020 (in thousands):

Corporate bonds

Commercial paper

There were no transfers between fair value levels during the three months ended March 31, 2021.

Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

Fair Value Measurements at

September 30, 2020

March 31, 2021

Cash equivalents:

2 unchanged sentences

Marketable securities:

Treasury securities

Corporate bonds

2 unchanged sentences

Total cash equivalents and marketable securities

The Company did not hold any marketable securities as of December 31, 2019.

There were no sales of marketable securities during the three and nine months ended September 30, 2020.

As of September 30, 2020, no securities were in an unrealized loss position.

The Company determined that it did not hold any securities with any other-than-temporary impairment as of September 30, 2020.

As of September 30, 2020, the remaining contractual maturity of all of the Company’s marketable securities is less than one year.

Fair Value Measurements at

December 31, 2020

Cash equivalents:

Money market funds

Total cash equivalents

Marketable securities:

Corporate bonds

Commercial paper

Total marketable securities

Total cash equivalents and marketable securities

There were no sales of marketable securities during the three months ended March 31, 2021.

As of March 31, 2021, the aggregate fair value of securities that were in an unrealized loss position for less than twelve months was $13.1 million.

The Company determined that it did not hold any securities with any other-than-temporary impairment as of March 31, 2021.

As of March 31, 2021, the remaining contractual maturity of all of the Company’s marketable securities is less than one year.

As of March 31, 2021, the Company did not intend to sell, and would not be more likely than not required to sell, the securities in an unrealized loss position before recovery of their amortized cost bases.

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

September 30,

Lab equipment

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Property and equipment, net

Depreciation expense for each of the three months ended September 30, 2020 and 2019 was $0.5 million.

Depreciation expense for the nine months ended September 30, 2020 and 2019 was $1.6 million and $1.5 million, respectively.

Depreciation expense for the three months ended March 31, 2021 and 2020 was $0.6 million and $0.5 million, respectively.

Additional Balance Sheet Detail

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid expenses

3 unchanged sentences

Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,

External research and development

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Preferred Stock

As of September 30, 2020 and December 31, 2019, 5,000,000 shares of undesignated preferred stock were authorized.

No shares of preferred stock were issued or outstanding as of September 30, 2020 and December 31, 2019.

During the nine months ended September 30, 2019, the Company issued 12,500,000 shares of Series B convertible preferred stock (the “Series B Preferred Stock”) in connection with the right of reference and license agreement, as amended (the “GSK Agreement”), with subsidiaries of GlaxoSmithKline plc (collectively referred to as “GSK”) (Note 11).

The rights, privileges, and preferences of the Series B Preferred Stock issued in connection with the GSK Agreement were consistent with the rights, privileges, and preferences of the Series B Preferred Stock issued during prior periods.

On July 5, 2019, the Company eliminated the gross proceeds threshold of $45.0 million for a firm-commitment underwritten public offering that would result in the automatic conversion of all outstanding shares of Series A convertible preferred stock and Series B Preferred Stock (together with the Series A convertible preferred stock, the “Preferred Stock”).

Upon the completion of the IPO on July 22, 2019, all 112,500,000 shares of outstanding Preferred Stock automatically converted into 16,071,418 shares of common stock.

In addition, upon the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize 5,000,000 shares of preferred stock, which shares of preferred stock are currently undesignated.

As of March 31, 2021 and December 31, 2020, 5,000,000 shares of undesignated preferred stock were authorized.

No shares of preferred stock were issued or outstanding as of March 31, 2021 and December 31, 2020.

No dividends have been declared since inception.

As of September 30, 2020 and December 31, 2019, the Company’s restated certificate of incorporation authorized the Company to issue 200,000,000 shares of common stock, $0.001 par value per share.

As of March 31, 2021 and December 31, 2020, 200,000,000 shares of common stock, $0.001 par value per share, were authorized.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders .

Common stockholders are not entitled to receive dividends, unless declared by the Company’s board of directors, subject to the preferential dividend rights of any preferred stock then outstanding.

Common stockholders are not entitled to receive dividends, unless declared by the Company’s board of directors, subject to the preferential dividend rights of any p referred s tock then outstanding .

No dividends have been declared or paid by the Company since its inception.

On August 11, 2020, the Company entered into an Equity Distribution Agreement with Piper Sandler & Co (“Piper Sandler”), as sales agent, pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $75.0 million under an “at-the-market” offering program (the “ATM Offering”).

The Equity Distribution Agreement provides that Piper Sandler will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the ATM Offering.

From the initiation of the ATM Offering through September 30, 2020, the Company has sold no shares under the ATM Offering.

As of September 30, 2020 and December 31, 2019 , the Company has reserved for future issuance the following number of shares of common stock :

September 30,

As of March 31, 2021 and December 31, 2020, the Company has reserved for future issuance the following number of shares of common stock:

Shares reserved for exercises of outstanding stock options

4 unchanged sentences

In July 2016, the Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”), which provided for the grant of restricted stock awards, restricted stock units, incentive stock options, non-statutory stock options, and other stock-based awards to the Company’s eligible employees, officers, directors, consultants, and advisors.

As of the effective date of the 2019 Stock Incentive Plan (the “2019 Plan”), and as of September 30, 2020, no shares remained available for future issuance under the 2016 Plan.

As of the effective date of the 2019 Stock Incentive Plan (the “2019 Plan”), and as of March 31, 2021, no shares remained available for future issuance under the 2016 Plan.

Any options or awards outstanding under the 2016 Plan remain outstanding and effective.

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The 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards to the Company’s officers, employees, directors, consultants and advisors.

The number of shares initially reserved for issuance under the 2019 Plan is 2,017,142 shares, plus the shares of common stock remaining available for issuance under the 2016 Plan as of July 17, 2019.

The number of shares reserved shall be annually increased on January 1, 2020 and each January 1 thereafter through January 1, 2029 by the least of (i) 2,000,000 shares, (ii) 4% of the number of shares of the Company’s common stock outstanding on the first day of each such year or (iii) an amount determined by the Company’s board of directors.

The number of shares initially reserved for issuance under the 2019 Plan was 2,017,142 shares, plus the shares of common stock remaining available for issuance under the 2016 Plan as of July 17, 2019.

The number of shares reserved will be annually increased on January 1, 2020 and each January 1 thereafter through January 1, 2029 by the least of (i) 2,000,000 shares, (ii) 4% of the number of shares of the Company’s common stock outstanding on the first day of each such year or (iii) an amount determined by the Company’s board of directors.

On January 1, 2021, the number of shares reserved for issuance under the 2019 Plan was increased by 1,122,696 shares.

As of September 30, 2020, there were 1,860,978 shares available for future issuance under the 2019 Plan.

As of March 31, 2021, there were 1,596,623 shares available for future issuance under the 2019 Plan.

The shares of common stock underlying any awards that expire, terminate, or are otherwise surrendered, cancelled, forfeited or repurchased by the Company under the 2016 Plan or the 2019 Plan will be added back to the shares of common stock available for issuance under the 2019 Plan.

As of July 17, 2019, no further awards will be made under the 2016 Plan.

For financial reporting purposes, the Company performed common stock valuations with the assistance of a third-party specialist as of May 10, 2019, March 15, 2019, November 30, 2018, August 24, 2018, June 1, 2018, December 31, 2017, and December 31, 2016 to determine stock-based compensation expense for restricted stock awards and stock options.

Upon completion of the IPO, the fair value of the common stock on the grant date was based on the closing price of the stock on the Nasdaq Global Market on the date of grant.

Restricted Stock

The Company may repurchase unvested shares at the original purchase price if employees or non-employees are terminated or cease their employment or service relationship with the Company.

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The shares of common stock are recorded in stockholders’ equity as they vest.

The following table summarizes the Company’s restricted stock activity under the 2019 Plan and 2016 Plan since December 31, 2019 :

The following table summarizes the Company’s restricted stock activity under the 2019 Plan and 2016 Plan during the three months ended March 31, 2021 :

Average Grant

Unvested at December 31, 2020

Unvested at September 30, 2020

Unvested at March 31, 2021

Stock Options

Stock options granted by the Company typically vest over a four-year period and have a ten year contractual term.

The following table summarizes the Company’s stock option activity under the 2019 Plan and 2016 Plan since December 31, 2019:

Shares issued upon the exercise of stock options are issued from the Company’s pool of authorized but unissued common stock.

The following table summarizes the Company’s stock option activity under the 2019 Plan and 2016 Plan during the three months ended March 31, 2021:

Exercise Price

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Exercisable at September 30, 2020

Outstanding at March 31, 2021

Exercisable at March 31, 2021

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock as of the balance sheet date for those options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted average grant date fair value of stock options granted during the three and nine months ended September 30, 2020 was $4.84 per share and $10.41 per share, respectively.

The weighted average grant date fair value of stock options granted during the three and nine months ended September 30, 2019 was $10.36 per share and $6.97 per share, respectively.

The total intrinsic value of stock options exercised during the three and nine months ended September 30, 2020 was $0.1 million and $1.2 million, respectively.

The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2019 was less than $0.1 million and $0.2 million, respectively.

The fair value of stock options granted during the three and nine months ended September 30, 2020 and 2019 under the 2019 Plan and the 2016 Plan has been calculated on the date of grant using the following weighted average assumptions:

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

The weighted average grant date fair value of stock options granted in the three months ended March 31, 2021 was $8.85 per share.

The weighted average grant date fair value of stock options granted in the three months ended March 31, 2020 was $11.06 per share.

The total intrinsic value of stock options exercised during the three months ended March 31, 2021 was $0.1 million.

The total intrinsic value of stock options exercised during the three months ended March 31, 2020 was $0.3 million .

The fair value of stock options granted during the three months ended March 31, 2021 and 2020 under the 2019 Plan has been calculated on the date of grant using the following weighted average assumptions:

March 31, 2021

March 31, 2020

Risk-free interest rate

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Expected stock price volatility

Grants Outside of Stock Incentive Plan s

The following table summarizes the Company’s restricted stock activity outside of the 2019 Plan and 2016 Plan since December 31, 2019:

Grants Outside of the 2016 Plan and the 2019 Plan

The following table summarizes the Company’s restricted stock activity outside of the 2019 Plan and 2016 Plan during the three months ended March 31, 2021:

Average Grant

Unvested at December 31, 2020

Unvested at September 30, 2020

The aggregate intrinsic value of all restricted stock awards that vested during the three months ended September 30, 2020 and 2019 was $0.7 million and $0.6 million, respectively.

The aggregate intrinsic value of all restricted stock awards that vested during the nine months ended September 30, 2020 and 2019 was $8.3 million and $3.0 million, respectively.

Unvested at March 31, 2021

The aggregate intrinsic value of all restricted stock awards that vested during the three months ended March 31, 2021 and 2020 was $0.5 million and $1.6 million, respectively.

Stock-based Compensation Expense

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

General and administrative

Research and development

Total stock-based compensation expense

As of September 30, 2020, the Company had an aggregate of $16.7 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of 2.62 years.

As of March 31, 2021, the Company had an aggregate of $25.3 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of 2.94 years.

2019 Employee Stock Purchase Plan

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A total of 252,142 shares of common stock were initially reserved for issuance under the ESPP.

In addition, the number of shares of common stock reserved under the ESPP shall be annually increased on January 1, 2020, and each January 1 thereafter through January 1, 2029, by the least of (i) 428,571 shares of common stock, (ii) 1% of the number of shares of the Company’s common stock outstanding on the first day of each such year or (iii) an amount determined by the Company’s board of directors.

In addition, the number of shares of common stock reserved under the ESPP is annually increased on January 1, 2020, and each January 1 thereafter through January 1, 2029, by the least of (i) 428,571 shares of common stock, (ii) 1% of the number of shares of the Company’s common stock outstanding on the first day of each such year or (iii) an amount determined by the Company’s board of directors.

On January 1, 2021, the number of shares reserved for issuance under the 2019 ESPP was increased by 280,674 shares.

As of March 31, 2021, there were 746,673 shares available for future issuance under the ESPP.

Collaboration and License Agreements

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Pursuant to a mutually agreed research plan, the Company will perform assay screening and related research activities to identify and validate potential biological targets for further research in order to support the development, manufacture and commercialization of product candidates by Acceleron.

Upon completion of the research activities, the Company will de liver a data package to Acceleron with respect to the biological targets identified by the Company in the conduct of the research activities for the treatment, prophylaxis, or diagnosis of the Indication.

As provided for under the exclusive worldwide licen se that was conveyed at the inception of the arrangement , Acceleron ha s the right to designate a specified number of the biological targets identified by the Company for Acceleron’s research, development, manufacture and commercialization of products or mo lecules directed to such targets for the treatment, prophylaxis, or diagnosis of the Indication (the “Targets”).

If Acceleron does not designate any Targets during the designated period, then the Acceleron Collaboration Agreement will automatically termina te.

Upon completion of the research activities, the Company will deliver a data package to Acceleron with respect to the biological targets identified by the Company in the conduct of the research activities for the treatment, prophylaxis, or diagnosis of the Indication.

As provided for under the exclusive worldwide license that was conveyed at the inception of the arrangement , Acceleron ha s the right to designate a specified number of the biological targets identified by the Company for Acceleron’s research, development, manufacture and commercialization of products or molecules directed to such targets for the treatment, prophylaxis, or diagnosis of the Indication (the “Targets”).

If Acceleron does not designate any Targets during the designated period, then the Acceleron Collaboration Agreement will automatically terminate.

If Acceleron designates one or more Targets, then Acceleron will be obligated to use commercially reasonable efforts to seek regulatory approval for one product directed to a Target in certain specified countries.

Upon receipt of regulatory approval fo r any product directed to a Target, Acceleron must use commercially reasonable efforts to commercialize such product in certain specified countries.

Upon receipt of regulatory approval for any product directed to a Target, Acceleron must use commercially reasonable efforts to commercialize such product in certain specified countries.

Acceleron may also request that the Company perform medicinal chemistry services related to the generation and optimization of molecules directed against or expressing biological targets for the treatment, prophylaxis, or diagnosis of the Indication beyond the scope of the research plan.

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The Company received a non-refundable upfront payment of $10.0 million in December 2019 upon the execution of the Acceleron Collaboration Agreement.

The Company will be entitled to research milestone payments of up to $18.5 million in the aggregate upon achievement of specified research milestones, development milestone payments of up to $202.5 million in the aggregate upon achievement of specified clinical and regulatory milestones, and sales milestones payments of up to $217.5 million in the aggregate upon the achievement of certain aggregate annual worldwide net sales milestones for certain products directed to a Target that have achieved such milestones.

In addition, the Company will be entitled to tiered royalties ranging from a mid single-digit percentage to a low double-digit percentage on Acceleron’s annual worldwide net sales of products directed to any Target, subject to reduction in specified circumstances.

The Company is entitled to research milestone payments of up to $18.5 million in the aggregate upon achievement of specified research milestones, development milestone payments of up to $202.5 million in the aggregate upon achievement of specified clinical and regulatory milestones, and sales milestones payments of up to $217.5 million in the aggregate upon the achievement of certain aggregate annual worldwide net sales milestones for certain products directed to a Target that have achieved such milestones.

To date, the Company has achieved $2.0 million of specified research milestones.

In addition, the Company is entitled to tiered royalties ranging from a mid single-digit percentage to a low double-digit percentage on Acceleron’s annual worldwide net sales of products directed to any Target, subject to reduction in specified circumstances.

The Company is also entitled to receive reimbursement from Acceleron for research costs incurred under the research plan, including internal and external costs.

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The Company assessed the above promises and concluded that the License is not capable of being distinct from the Research Services given that the License has limited value without the performance of the Research Services and the Research Services can only be performed by the Company due to their specialized nature .

Therefore, the Company has concluded that the License and the Research Services r epresent a single combined performance obligation.

Therefore, the Company has concluded that the License and the Research Services represent a single combined performance obligation.

The Company also assessed the participation on the JSC and concluded that the promise is quantitatively and qualitatively immaterial in the context of the Acceleron Collaboration Agreement.

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The Company received a non-refundable upfront payment of $10.0 million upon the execution of the Acceleron Collaboration Agreement, which the Company included in the transaction price.

Based on the uncertainty associated with the achievement of any research and development milestone payments that the Company is eligible to receive, the Company has constrained the variable consideration associated with those milestone payments and excluded them from the transaction price.

As part of its evaluation of constraining the research and development milestones, the Company considered numerous factors, including the fact that the achievement of the research and development milestones are contingent upon the results of the underlying research and development activities and are thus outside of the control of the Company.

In December 2020, the Company achieved $2.0 million of specified research milestones associated with the Acceleron Collaboration Agreement, which were previously constrained due to the significant uncertainty regarding whether such research milestones would be achieved.

The Company included this amount in the transaction price as of December 31, 2020.

Based on the continued uncertainty associated with the achievement of any of the remaining research and development milestone payments that the Company is eligible to receive, the Company has constrained the variable consideration associated with those remaining milestone payments and excluded them from the transaction price.

As part of its evaluation of constraining the remaining research and development milestones, the Company considered numerous factors, including the fact that the achievement of the research and development milestones are contingent upon the results of the underlying research and development activities and are thus outside of the control of the Company.

The Company also included in the transaction price the expected amount of costs to be reimbursed for the Research Services.

The Company reassesses the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjusts its estimate of the transaction price.

There was no change in the amount of variable consideration constrained during the three and nine months ended September 30, 2020.

There was no change in the amount of variable consideration constrained during the three months ended March 31, 2021.

Any consideration related to sales milestone payments (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to Acceleron and therefore are recognized at the later of when the related sales occur or the performance obligation is satisfied.

8 unchanged sentences

Changes in estimates of total internal and external costs expected to be incurred are recognized in the period of change as a cumulative catch-up adjustment.

During the three and nine months ended September 30, 2020, the Company recognized $1.5 million and $4.3 million, respectively, of collaboration revenue associated with the Acceleron Collaboration Agreement.

As of December 31, 2019, no Research Services had been performed.

For the three and nine months ended September 30, 2019, the Company did not recognize any revenue under the Acceleron Collaboration Agreement as it had not yet entered into the Acceleron Collaboration Agreement.

As of September 30, 2020 and December 31, 2019, the Company recorded deferred revenue of $7.4 million and $10.0 million, respectively, associated with the Acceleron Collaboration Agreement, which is classified as either current or net of current portion in the accompanying consolidated balance sheets based on the period over which the revenue is expected to be recognized.

The aggregate deferred revenue balance represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of September 30, 2020 and December 31, 2019, respectively.

As of September 30, 2020, the Company had received $1.1 million of cost reimbursement payments, and no milestone or royalty payments under the Acceleron Collaboration Agreement.

As of December 31, 2019, the Company had not received any milestone, royalty, or cost reimbursement payments under the Acceleron Collaboration Agreement.

As of September 30, 2020, the Company recorded unbilled accounts receivable of $0.6 million related to reimbursable Research Services costs under the Acceleron Collaboration Agreement for activities performed during the three months ended September 30, 2020.

During the three months ended March 31, 2021, the Company recognized $2.6 million of collaboration revenue associated with the Acceleron Collaboration Agreement, which includes $2.1 million of revenue recognized that was included in deferred revenue as of December 31, 2020.

During the three months ended March 31, 2020, the Company recognized $0.8 million of collaboration revenue under the Acceleron Collaboration Agreement.

As of March 31, 2021 and December 31, 2020, the Company recorded deferred revenue of $5.8 million and $7.9 million, respectively, associated with the Acceleron Collaboration Agreement, which is classified as either current or net of current portion in the accompanying consolidated balance sheets based on the period over which the revenue is expected to be recognized.

The aggregate deferred revenue balance represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of March 31, 2021 and December 31, 2020, respectively.

March 31, 2021 , the Company had received $ 2.2 million of cost reimbursement payments under the Acceleron Collaboration Agreement and $ 2.0 million associated with the achievement of specified research milestones.

As of December 31, 2020 , the Company had received $ 1.7 million of cost reimbursement payments, and no milestone or royalty payments under the Acceleron Collaboration Agreement.

As of March 31, 2021 , the Company had recorded no accounts receivable under the Acceleron Collaboration Agreement.

As of December 31, 2020 , the Company recorded accounts receivable of $2.0 million associated with the achievement of specified research milestones in December 2020.

As of March 31, 2021 , the Company recorded unbilled accounts receivable of $0.

5 million related to reimbursable r esearch and development costs under the Acceleron Collaboration Agreement for activities performed during the three months ended March 31, 2021 .

As of December 31, 2020 , the Company recorded unbilled accounts receivable of $ 0.5 million related to reimbursable research and development costs under the Acceleron Collaboration Agreement for activities performed during the three months ended December 31, 2020 .

MyoKardia Collaboration Agreement

On July 20, 2020, the Company entered into the MyoKardia Collaboration Agreement with MyoKardia, pursuant to which the Company granted to MyoKardia an exclusive worldwide license under certain intellectual property rights to research, develop, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported, export, have exported, distribute, have distributed, market, have marketed, promote, have promoted, or otherwise exploit products directed against certain biological targets identified by the Company that are capable of modulating up to a certain number of genes of interest with relevance to certain genetically defined cardiomyopathies.

On July 20, 2020, the Company entered into the MyoKardia Collaboration Agreement, pursuant to which the Company granted to MyoKardia an exclusive worldwide license under certain intellectual property rights to research, develop, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported, export, have exported, distribute, have distributed, market, have marketed, promote, have promoted, or otherwise exploit products directed against certain biological targets identified by the Company that are capable of modulating up to a certain number of genes of interest with relevance to certain genetically defined cardiomyopathies.

Pursuant to a mutually agreed research plan, the Company will perform assay screening and related research activities to identify and validate up to a specified number of potential cardiomyopathy gene targets (“Identified Targets”) for further research, development, manufacture and commercialization by MyoKardia.

29 unchanged sentences

There was no change in the amount of variable consideration constrained during the three months ended March 31, 2021.

Any consideration related to sales milestone payments (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to MyoKardia and therefore are recognized at the later of when the related sales occur or the performance obligation is satisfied.

8 unchanged sentences

Changes in estimates of total internal and external costs expected to be incurred are recognized in the period of change as a cumulative catch-up adjustment.

During the three and nine months ended September 30, 2020, the Company recognized $0.3 million of collaboration revenue associated with the MyoKardia Collaboration Agreement.

For the three and nine months ended September 30, 2019, the Company did not recognize any revenue under the MyoKardia Collaboration Agreement as it had not yet entered into the MyoKardia Collaboration Agreement.

As of September 30, 2020, the Company recorded deferred revenue of $12.2 million associated with the MyoKardia Collaboration Agreement, which is classified as either current or net of current portion in the accompanying consolidated balance

sheets based on the period over which the revenue is expected to be recognized.

As of December 31, 2019, the Comp any recorded no deferred revenue associated with the MyoKardia Collaboration Agreement as it had not yet entered into the MyoKardia Collaboration Agreement.

The aggregate deferred revenue balance represents the aggregate amount of the transaction price all ocated to the performance obligations that are unsatisfied as of September 30, 2020.

As of September 30, 2020, t he Company had not received any milestone, royalty, or cost reimbursement payments under the MyoKardia Collaboration Agreement, other than the $ 2.5 million payment as prepaid research funding in July 2020 .

As of September 30, 2020, the Company has recorded no accounts receivable related to reimbursable MyoKardia Research Services costs under the MyoKardia Collaboration Agreement.

Asset Acquisition

In February 2019, the Company entered into the GSK Agreement, pursuant to which the Company has been granted an exclusive worldwide license to develop and commercialize losmapimod.

During the three months ended March 31, 2021, the Company recognized $2.2 million of collaboration revenue associated with the MyoKardia Collaboration Agreement, all of which was included in deferred revenue as of December 31, 2020.

During the three months ended March 31, 2020, the Company did not recognize any revenue under the MyoKardia Collaboration Agreement as it had not yet entered into the MyoKardia Collaboration Agreement.

As of March 31, 2021, the Company recorded deferred revenue of $7.8 million associated with the MyoKardia Collaboration Agreement, which is classified as either current or net of current portion in the accompanying consolidated balance sheets based on the period over which the revenue is expected to be recognized.

As of December 31, 2020, the Company recorded $10.0 million of deferred revenue associated with the MyoKardia Collaboration Agreement.

The aggregate deferred revenue balance represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied as of March 31, 2021.

As of March 31, 2021, t he Company had not received any milestone, royalty, or cost reimbursement payments under the MyoKardia Collaboration Agreement, other than the $2.5 million payment as prepaid research funding in July 2020 .

As of March 31, 2021, the Company has recorded no accounts receivable related to reimbursable MyoKardia Research Services costs under the MyoKardia Collaboration Agreement.

Right of Reference and License Agreement

In February 2019, the Company entered into the right of reference and license agreement, as amended (the “GSK Agreement”), with subsidiaries of GlaxoSmithKline plc (collectively referred to as “GSK”), pursuant to which the Company has been granted an exclusive worldwide license to develop and commercialize losmapimod.

Under the GSK Agreement, the Company also acquired reference rights to relevant regulatory and manufacturing documents and GSK’s existing supply of losmapimod drug substance and product.

2 unchanged sentences

The Company is also responsible for costs related to the filing and maintenance of the licensed patent rights.

Under the GSK Agreement, the Company issued 12,500,000 shares of Series B Preferred Stock to GSK with an estimated fair value of $25.5 million, or $2.04 per share, which was determined with the assistance of a third-party specialist contemporaneously with the issuance of the Series B Preferred Stock to GSK.

In addition, the Company may owe GSK up to $37.5 million in certain specified clinical and regulatory milestones, including $2.5 million due upon the initiation of a Phase 2 clinical trial, which was achieved and paid during the third quarter of 2019, and up to $60.0 million in certain specified sales milestones.

Under the GSK Agreement, the Company issued 12,500,000 shares of Series B Preferred Stock to GSK.

In addition, the Company may owe GSK up to $37.5 million in certain specified clinical and regulatory milestones, including $2.5 million previously achieved and paid during the third quarter of 2019, and up to $60.0 million in certain specified sales milestones.

The Company has agreed to pay tiered royalties on annual net sales of losmapimod that range from mid single-digit percentages to a low double-digit, but less than teens, percentage.

The royalties are payable on a product-by-product and country-by-country basis, and may be reduced in specified circumstances.

The Company also incurred $0.1 million of direct expenses related to the transaction, which the Company included in the total consideration for the transaction.

The GSK Agreement may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Unless earlier terminated, the GSK Agreement will continue in effect until the expiration of the Company’s royalty obligations, which expire on a country-by-country basis on the later of (i) ten years after the first commercial sale in the country or (ii) approval of a generic version of losmapimod by the applicable regulatory agency.

The Company concluded the arrangement did not result in the acquisition of a business, as substantially all of the fair value of the gross assets acquired was concentrated in a single in-process research and development asset, losmapimod.

In addition, the Company did not obtain any substantive processes in connection to the GSK Agreement and losmapimod was not generating revenue at the time the GSK Agreement was executed.

Therefore, the Company accounted for the arrangement as an asset acquisition.

The Company also concluded that the acquired assets do not have an alternative future use, and therefore the fair value attributable to the GSK Agreement of $25.6 million, inclusive of transaction costs, was recorded as in-process research and development expense (a component of research and development expenses) in the Company’s consolidated statement of operations and comprehensive loss during the first quarter of 2019, which is the period in which the Company obtained (i) the license to losmapimod, (ii) the right to reference relevant regulatory and manufacturing documents, and (iii) GSK’s existing supply of losmapimod drug substance and product.

Additionally, the Company will recognize clinical and regulatory milestone payments when the underlying contingency is resolved and the consideration is paid or becomes payable.

The Company will recognize clinical and regulatory milestone payments when the underlying contingency is resolved and the consideration is paid or becomes payable.

The milestone payments will be capitalized or expensed depending on the nature of the associated asset as of the date of recognition.

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The lease agreement requires the Company to either pay a security deposit or maintain a letter of credit of $1.1 million.

The Company maintains a letter of credit for this lease and has recorded the cash held to secure the letter of credit as restricted cash on the consolidated balance sheet as of September 30, 2020 and December 31, 2019.

Rent expense associated with this lease for each of the three months ended September 30, 2020 and 2019 was approximately $0.5 million.

Rent expense associated with this lease for each of the nine months ended September 30, 2020 and 2019 was approximately $1.4 million.

The future minimum lease payments associated with the lease for the Company’s current headquarters as of September 30, 2020 , are as follows (in thousands):

The Company maintains a letter of credit for this lease and has recorded the cash held to secure the letter of credit as restricted cash on the consolidated balance sheet as of March 31, 2021 and December 31, 2020.

Rent expense associated with this lease for each of the three months ended March 31, 2021 and 2020 was approximately $0.5 million.

The future minimum lease payments associated with the lease for the Company’s current headquarters as of March 31, 2021 , are as follows (in thousands):

Total minimum lease payments

Amounts are for the three months ending December 31, 2020.

Amounts are for the nine months ending December 31, 2021.

Other Agreements

1 unchanged sentence

If the Company exercises its rights to license the technologies, it may be subject to additional fees and milestone payments.

As of September 30, 2020, the Company has not exercised its rights to license such technologies.

As of March 31, 2021, the Company has not exercised its rights to license such technologies.

Indemnification Agreements

3 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations as of September 30, 2020 or December 31, 2019.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations as of March 31, 2021 or December 31, 2020.

Legal Proceedings

2 unchanged sentences

The Company expenses the costs related to its legal proceedings as they are incurred.

No such costs have been incurred during the three and nine months ended September 30, 2020 and 2019.

No such costs have been incurred during the three months ended March 31, 2021 and 2020.

Defined Contribution Plan

3 unchanged sentences

Net Loss per Share

The following common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Outstanding stock options

Unvested restricted stock awards

Related-Party Transactions

During the three and nine months ended September 30, 2019, the Company paid fees to Third Rock Ventures, LLC (“TRV”), an affiliate of one of the Company’s principal stockholders, in exchange for consulting services.

The Company recorded expenses related to such fees of less than $0.1 million during the nine months ended September 30, 2019.

The Company did not record expenses related to such fees during the three and nine months ended September 30, 2020 or the three months ended September 30, 2019.

During the three and nine months ended September 30, 2020, the Company did not pay fees to TRV in exchange for services.

As of December 31, 2019, there was less than $0.1 million of amounts due to TRV for such services that were included in accounts payable and accrued expenses.

As of September 30, 2020, there were no amounts due to TRV for such services that were included in accounts payable and accrued expenses.

Additionally, consultants that provide services to the Company are employees of TRV.

The Company has issued an aggregate of 142,284 shares of common stock to these consultants in exchange for their continuing consulting services.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements